The Federal Reserve noted at their latest meeting that since the FOMC met in February the labor market has continued to strengthen and economic activity has continued to expand at a moderate pace. Job gains remained solid and the unemployment rate was little changed in recent months. Household spending has continued to rise moderately while business fixed investment appears to have firmed somewhat. Inflation has increased in recent quarters, moving close to the FOMC’s 2% longer-run objective, excluding energy and food prices, inflation was little changed and continued to run somewhat below 2%.
In view of realized and expected labor market conditions and inflation, the committee decided to raise the target range for the federal funds rate to 3/4 to 1%. The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a sustained return to 2% inflation.
Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance. Consistent with its statutory mandate, the committee seeks to foster maximum employment and price stability. The committee expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, labor market conditions will strengthen somewhat further, and inflation will stabilize around 2% over the medium term. Near-term risks to the economic outlook appear roughly balanced. The committee continues to closely monitor inflation indicators and global economic and financial developments.
Voting for the FOMC monetary policy action were: Janet L. Yellen, chair; William C. Dudley, vice chairman; Lael Brainard; Charles L. Evans; Stanley Fischer; Patrick Harker; Robert S. Kaplan; Jerome H. Powell; and Daniel K. Tarullo. Voting against the action was Neel Kashkari, who preferred at this meeting to maintain the existing target range for the federal funds rate.